Central banks around the world are moving to further slash interest rates as they seek to contain the damage from the bursting of the biggest credit bubble in history.

The Federal Reserve is poised to cut its benchmark rate for the second time in two weeks at a pivotal meeting in Washington on Wednesday, and the European Central Bank yesterday suggested that it would do the same next week. South Korea announced a dramatic rate cut yesterday, by three-fourths of a percentage point.

Governments worldwide have already approved massive bailouts and stimulus packages to halt financial meltdowns. But the trouble spots in the United States and abroad continue to multiply. Yesterday, there were growing signs that the U.S. Treasury Department was close to extending its $700 billion rescue program to cover the ailing auto industry.

Analysts said governments are trying to manage what has become the biggest threat to the global financial system -- a massive pullout by panicked investors from any holding they see as remotely risky. From consumers to multibillion-dollar hedge funds, investors are cashing out to cover losses or guard against further damage by moving into safe havens such as U.S. Treasurys.

Rate cuts, however, are not packing their usual punch. Normally, when central banks cut rates, it becomes cheaper for businesses and consumers to borrow money. But now, with banks and other financial institutions experiencing a severe crisis, lenders have been reluctant to extend credit at any price.

The pullback by investors, known as deleveraging, is extending massive losses on global stock markets; the Hong Kong stock market on Monday had its biggest one-day percentage drop since 1989, and Tokyo's Nikkei fell to its lowest level in 26 years.

Officials are growing increasingly concerned that the pullback is affecting currency markets, with economists warning of a growing disequilibrium in global exchange rates.

Although confidence may be shaken in the American economy, foreign investors still see the U.S. dollar as more reliable than most other currencies, with the rush to the dollar sending its value soaring against the euro, the British pound and a host of emerging-market coins in recent weeks. As currencies weaken in emerging markets including Brazil, Mexico and South Korea, corporations in those countries that have foreign loans or other bets in dollars are being slammed as debts suddenly become more expensive to pay back.

In Japan, the reverse is happening. Investors are burrowing into the yen, rapidly driving up its price against both the dollar and the euro.

For much of the past decade, investors have borrowed yen -- at Japan's very low interest rates -- to buy positions in other currencies in emerging economies such as South Africa and Brazil, where yields have been far higher. The financial crisis has soured many of those bets. Investors are rushing back to the security of the yen and, in the process, driving up the currency's value.

Just as the surge in the dollar is making Ford and General Motors cars more expensive overseas, the gain in the yen is doing the same to Sony televisions and Canon cameras just as global demand for them dwindles.

The yen's swing has been so sharp that the Group of Seven industrialized nations warned yesterday of "possible adverse implications for economic and financial stability." That statement hinted at a possible joint intervention in currency markets to stabilize the yen, in a move similar to actions taken by central banks in 1995 and 1998.